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Rejuvenating South Africa's economy - Lessons from Germany

The Inclusive Society Institute has commissioned research aimed at developing an economic blueprint for South Africa that will be capable of catapulting the country out of its current downward trajectory, whilst simultaneously transforming it to address inequality, to mainstream the informal sector and to become more demographically inclusive. The research is being done against the backdrop of the economy remaining stubbornly sluggish.

Without factoring in the impact of COVID-19, GDP growth is estimated to be less than one per cent, debt to GDP has risen to over 65 percent, and unemployment stands at a record high of 30 percent (narrow definition), or around 40% (expanded definition). The impact of the COVID-19 measures could see a GDP contraction of between 6 and 7 per cent.

Imaginative thinking is required. It is the institutes view that the current neo-liberal economic model is not, on its own and within the South African context, delivering the desired results. Inequality, unemployment, and poverty continues to grow. It believes that the introduction of social democratic developmental programmes could contribute to addressing the lingering backlogs. By blending these policies with the current regime will deliver a mixed economy more capable of achieving fairness and economic justice within an inclusive growth centred economy, more capable of bringing about demographic transformation and the provision of the safety-nets and cross-subsidiarity needed to ensure dignity for the poor.

As part of the first phase of the project, a panel discussion was hosted by the institute on Thursday, 20 August 2020, via ZOOM. The objective of the seminar was to examine Germanys post-WW2 economic development, so as to consider whether there are any lessons that South Africa can draw on from the path Germany chose. And to consider the applicability of that path within South African context and the modern global architecture.

The keynote presentation was made by Prof Klaus Boehnke, who is associated with the Bremen International Graduate School of Social Sciences, Jacobs University. The title of his presentation was “Social Cohesion – a pathway to citizen’s well-being and economic prosperity? The case of Germany and the OECD world.”

Social Cohesion played an enormous role in Germany’s Konzertierte Aktion (Concerted Action), the purpose of which was to through the Stability and Growth Act coordinate behaviour between the political authorities responsible for macro-economic stability on the one hand and the trade unions, business and civil society on the other, which aimed at averting macroeconomic disturbances. In recognising social cohesion as the glue that binds society together and the importance thereof for economic justice, stability and growth, the German authorities continue to prioritise efforts in this regard.

Other panellists included:

  • Mr Theo Vorster, a well-known economist, TV personality and the Chief Executive Officer at Galileo Capital. He is facilitating the Inclusive Society Institute’s economic project.

  • Professor Tania Ajam, who is associated with the School for Public Leadership at the University of Stellenbosch. She is also a member of the President’s Economic Advisory Council

  • Ms Joan Fubbs, Director of the Centre for Education in Economics and Finance (CEEF). She was also the former longstanding chairperson of the parliamentary portfolio committee for trade and industry.

  • Professor Zweli Ndevu, the institute’s Deputy Chairperson. He is the head of the School for Public Leadership at the University of Stellenbosch.

The event was broadcast live via YouTube to invited guests from business, civil society and the ranks post-graduate students.

Prof Dr Klaus Boehnke


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